The offbeat personal finance blog for responsible people.

Black Coffee: Maybe We Could Try Selling the Naming Rights to Infinity

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance. Here’s what caught my attention over the past week…

Ever notice how some people get passionate about their brand of bottled water? “Store brand water? Oh, no. Can’t touch that! I’m an (AquaFina/Dasani/etc.) guy.”

What’s up with that? It’s freaking water!

Remember when nobody batted an eyelash when it came to drinking H2O from a hose, or direct from the tap? I do.

Credit: Now that sequestration is on, everybody is waiting for the economic blow-back as the Pentagon and other US federal agencies begin implementing furloughs and other austerity measures.

Debit: Psst. Come closer. For all the hullabaloo, it’s much ado about nothing, equivalent to a household with annual expenditures of $38,420 agreeing to slash its spending by just $440. I know.

Debit: Of course, despite its relative puniness, some politicians insist the sequestration is going to result in economic Armageddon.

Credit: And if you believe that, then you must also believe the government didn’t waste a single penny of the $3.8 trillion it spent last year — even on the hundreds of millions it pays its federal workers each year not to work for Uncle Sam.

Debit: The hysteria in Washington DC is absolutely gobsmacking. Never mind the military cuts. Lawmakers are warning that everything from women’s health to oil drilling will be affected by these relatively tiny spending reductions. Right.

Credit:Frankly, I suspect the lawmakers’ biggest fear is that Americans will realize life won’t come to a screeching halt after we drastically reduce the number of federal bureaucrats who lord over us. We’ll actually be better off.

Debit: And despite all of the US politicians’ misleading pomp and circumstance regarding their new-found “commitment” to fiscal responsibility, under their management this year, the government will still spend nearly $1 trillion more than it earns.

Debit: Speaking of government healthcare, the Greeks are learning a hard lesson on why price controls never work. Panic is now the order of the day there after their politicians artificially dropped medication prices 20% below market rates to make them more affordable. Foolish.

Debit:As a result, rampant drug shortages now exist across Greece as supplies are down by 90%. Of course, many of the people there are blaming the pharmaceutical companies for the shortages. Unbelievable.

Debit: Too bad Greece isn’t like the United States. Did you know the US can owe “an infinite amount of money” to our creditors and never have to worry about defaulting? At least, that’s what New York City nanny mayor, Michael Bloomberg said the other day.

Credit: I guess Bloomberg never bothered to calculate the annual interest on infinity. Then again, maybe his math skills suck. And, as commenter Brian Boswell points out, even if Bloomberg’s ridiculous assertion was true, then why are we still paying taxes? Bravo, Brian.

Debit:Although it’s nowhere near infinity, for three months now, Japan has had their yen printing press on overdrive. And while Japan’s stock market has benefited from the money printing in nominal terms, the real gains are being wiped out by inflation, as evidenced by a coming 10% increase in wholesale wheat prices.

Debit:Of course, while only some folks in Japan benefit from the rising stock market, everybody gets to “enjoy” the effects of higher inflation.

Debit:It’s a good thing wheat prices in America are staying relatively stable because US personal incomes in January suffered their biggest drop in 20 years, thanks mainly to rising taxes.

Programming note: Unlike most blogs, I’m always open for the weekend here at Len Penzo dot Com. There’s a fresh new article waiting for you every Saturday afternoon. At least there should be. If not, somebody call 9-1-1.

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Letters, I Get Letters

Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: Len@LenPenzo.com

Comments

Len, while the sequestation is a 2.2% budget cut, the federal government has two types of spending, discretionary and mandatory. Because the mandatory spending (medicare, social security, active military personnel in combat areas, etc) is not cut in sequestration, the spending cuts are going toward discretionary spending resulting in agencies being hit with a 6.6% spending decrease.

How much will the wages or benefits or travel allowances of your American politicians be cut because of your sequester? I am guessing zero but I am Canadian and think your government is all a little crazy.

Did you have a chance to watch Congressman Sean Duffy grill Ben Bernanke a few days ago? He was the only representative that didn’t simply ask Bernanke to repeat an earlier comment. Youtube “Sean Duffy Ben Bernanke” if you didn’t catch it. TBS would admit it’s very funny.

No, but I promise to check it out. Thanks for the heads up! I love it when “the Bernank” gets a few hardball questions. His answers are a joke, generally.

Like when he told Ron Paul that “gold isn’t money.” No, seriously. Then Paul asked him why people many still consider gold and silver to be real money rather Federal Reserve Notes. Bernanke’s answer: “Tradition, I guess.” Tradition. Unbelievable.

How widely known is the fact that the White House has pretty granular control over what gets cut in sequestration? IF the people see any impact it’s because the White House chose that particular agency to get cut. Then again, if you read my article from last Wednesday you’ll know that my hope is that the American people realize that BIG government has very little impact on their day to day lives.

BUT….(you knew there was a “but” right?!?) I am getting a bit tired of reading about how the sequester is not going to impact anybody…or only going to impact “government parasites”.

Let me tell you my story. I am an ER/trauma nurse. About 3.5 years ago, I took a massive pay cut (I made more my first year out of nursing school more than 10 years ago than I do now) to work as a nurse in a military hospital. I strongly feel (regardless of anyone’s political opinions regarding the wars) that our troops deserve the best care possible….and I am a very good very very very hard working nurse (esp when compared to the average govt. employee) . I am a govt employee that actually works weekends…works holidays….works 12 hour night shifts. Now there are govt employees that fit the stereotype….they work in offices…..carry clipboards…..have lots of time for coffee breaks/meetings/travel…when I hardly have time to go the bathroom. They also make a lot more money than me (and most don’t even have college degrees) I have come to the conclusion that govt does not really have time for people that “do”…”boots on the ground” people I call them..their respect is for those that “administrate”…..whatever that entails….from Mon-Fri from 0800-1600 (no holidays, of course and not at lunch time)

And now I face a 20% pay cut of my already pathetic salary. Of course being a hardworking, responsible person..I have tons of sick/leave time…of which I am not allowed to use. Listen…I know the score…I know that I am an easy political football for the powers in Washington (which is why I voted for Ron Paul and then Gary Johnson). I know that the money could have come from somewhere but my salary….but it wouldn’t result in sexy headlines that the “middle class are being oppressed” that both parties love to hog the microphone with.

Thank goodness I live below my salary..basically this will mean seeing the husband only every other month instead of every month (he is active military stationed in a country where I can’t get a nursing job)…yes…that is what REAL fiscal responsibility/sacrifice looks like…living in a different country than your husband:-O

I just work with some amazing hardworking people that are going to be severely impacted by this….and a lot are just like me…they never imagined themselves as govt employees…they just felt a call to serve….and to fill a void where experienced hardworking dedicated nurses/doctors/mental health therapists/etc were DESPERATELY needed.

Other than that….you rock! I look forward to your black coffee post every week:-)

It’s okay, Jen. Believe me, I agree with you. Yes, our military members absolutely deserve the best care possible — it’s the least this nation can do for them.

I’m also well aware that there are some very important — and extremely hard working — government employees who get paid a pittance. Of course, they tend to be those who work in the trenches and get their hands dirty (like our soldiers, and military doctors and nurses). Thank you for your service to our nation, Jen. I truly appreciate it.

Unfortunately, most government workers are paper-pushing bureaucrats whose biggest job is to create the red tape that makes life more difficult for the rest of us. I think most Americans realize the difference.

The real shame is this sequester purposely cut into bone, rather than trimming fat — and it was done solely for political purposes. It’s truly pathetic, but this is how badly things have devolved in Washington.

Hang in there. It’s always darkest right before dawn. I’m certain things still have to get a lot worse before they get better — until then we’ll continue down the ridiculous fiscal path we currently find ourselves on — but hopefully, for the sake of everyone, morning isn’t too far away.

The demonising of public servants is not only in the US. There are many excellent people working in the public sector in the UK – not only our overstretched military. No doubt there are some, particularly in Whitehall (ie central government) who are paper-pushers while the municipals and health service are being cut to below the bone level. Following new liberal approaches there is also a cadre of senior administrators who think they are running a large corporation so demand massive pay deals. They are running a public service. Their jobs should routinely and genuinely be put up for competition but they aren’t because they are mates of the politicians by and large.

It is not so much the pen-pushers who are at fault here but the senior management (ie politicians and those who rock that cradle) who pass unworkable and ill-thought-out legislation – or worse, who deliberately pass laws that are designed to ruin people’s lives and hopes.

Just has here there are issues over multinationals avoiding tax, the same is true in the US but much more tax is avoided. Concerted international action on that alone would, I suspect, fund Obamacare and more, in the US alone.

This may be a European response – and of course we are all closet socialists over here – but that doesn’t make it invalid either.

I’m sorry but I too have to disagree with you Len. I live in the DC area. A lot of folks I know, who are not paper pushers, are having to make some tough decisions, from taking roommates to seeing if they will be allowed (yes ALLOWED) to work when they are sequestered to pick up the lost money. So for those of us here, this is a big deal.

It’s okay, CandiO. And I get it; I realize people are being affected who aren’t paper pushers.

But my point isn’t that the impacts are insignificant on a personal level — but that they are insignificant on a spending level. I think we can both agree on that.

As I mentioned to Jennifer, it’s unfortunate that the politicos have decided to sacrifice some of the most important gov’t jobs — rather than focusing on the countless areas of waste and duplication in order to make political hay.

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